Business and Society

Manager’s skills important to CSR performance

October 23, 2013 | 3 min read

In the past years, evidence has been accumulated on the relevance of CSR explaining earnings quality (Kim et al. 2012) [1], equity financing costs (El Ghoul et al. 2011) [2], and firm‘s disclosure (Dhaliwal et al. 2011) [3]. The study, “A Good Horse Never Lacks a Saddle: Management Quality Practices and Corporate Social Responsibility”, digs into the role of organization capital. Attig defines CSR as “managerial actions and practices that are likely to positively affect relevant stakeholders‘ interests (e.g. investors, consumers, society, the government and the community).” He maintains that firms with high MQP are associated with more (efficient) CSR, which in turn translates into corporate value creation. My premise is that, all else equal, managers are those who conduct the business, and are usually empowered with the formal authority to formulate corporate strategies and adopt policies and practices.”

Management quality practices

For his study, Attig used unique survey-based data on management quality practices (MQP) from three separate databases at the plant level to proxy for organization capital. He obtained data on 18 different management practices from Bloom and Van Reenen (2007)[4] on a sample of 290 medium-sized U.S. manufacturing firms with 50 to 10,000 employees. Then, he matched this sample with statistics from KLD Research & Analytics to extract CSR scores. Third, Attig used COMPUSTAT to collect additional financial information for his sample firms. After these screenings, his final sample contained 190 medium-sized U.S. manufacturing firms and 1088 firm-year observations over the period 2001-2009 —thereby assuming that MQP is relatively sticky and does not change significantly within firms over time.

Attig’s univariate and multivariate analyses suggest that top managers exert significant individual-specific influence over CSR activities. “I also show that superior managerial competencies seem to matter more in explaining cross-sectional differences in CSR strengths, and the CSR dimensions of employee relations and diversity. These findings indicate that superior management competencies are associated with proactive investments in CSR that are socially desired and go beyond the firm‘s objective of making immediate profits. Thus, they are rather likely to enhance firms‘ social reputation and avoid negative social pressure.” This in turn would result in long-term benefits. Also, Attig provides novel evidence that CSR enhances firm performance only in the presence of managers with superior MQP. “This result is salient as it sheds light on the relationship between CSR and corporate performance, suggesting that the heterogeneous (unobservable) manager-specific talents and abilities play a non-negligible role in altering the effects of CSR on corporate performance.”

Signaling superior MQP to stakeholders I crucial

Interestingly, Attig’s simultaneous analysis suggests that MQP does not bear significantly on corporate value in the presence of the interaction variable between MQP and CSR (ZMQP*CSR). As argued by Bloom and Van Reenen (2007), “better management practices may not translate into profit increase and value creation, even if they increase productivity. This might be the case because the high costs of investing in high MQP (e.g. adopting new technologies, hiring qualified managers, training employees) may not outweigh the expected benefits, especially because MQP are unobservable. My result lends support to this proposition and suggests that, rather, it is the signaling of superior MQP to firm’s stakeholders that creates value and not MQP per se,” writes Attig.

His study crosses the disciplinary boundaries of behavioral economics, financial accounting, organizational capital and strategic management, Attig argues, “to demonstrate that idiosyncratic manager competencies map onto corporate social performance, adding credence to the theoretical argument that corporate outcomes are human constructions and reflections of managers‘ talents and abilities.” The results are robust to the use of various model specifications, the use of a set of interview noise controls to mitigate biases across interviewers and types of interviewees, and to potential endogeneity bias. “In particular, my conclusions remain unchanged when I use managers‘ self-reported number of competitors and firms‘ succession of corporate control by eldest son (primogeniture) to instrument MQP. While the limits of my survey-based sample and the CSR constructs lead us to be careful not to overreach in my conclusions, overall, my evidence suggests that being good (managers), leads to doing good (socially), which in turn translates into reaping good (financially).”


  1. Kim, Yongtae, Myung Seok Park, and Benson Wier. “Ethical concerns likely to spur high-quality financial reporting”
  2. El Ghoul, Sadok, Dev Mishra, Chuck C.Y. Kwok, and Omrane Guedhami. “Better CSR = lower cost of equity capital”
  3. Dhaliwal, Dan S., Oliver Zhen Li, Albert Tsang, and Yong George Yang. “Voluntary Nonfinancial Disclosure and the Cost of Equity Capital: The Initiation of Corporate Social Responsibility Reporting”. The Accounting Review 86, nr. 1 (januari 2011): 59–100.
  4. Bloom, Nick, en John Van Reenen. Measuring and Explaining Management Practices Across Firms and Countries. Working Paper. National Bureau of Economic Research, mei 2006. 

Read more

A good horse-management quality practices-etc


Lloyd Kurtz
Lecturer of social investing, Haas School of Business

Knowledge area's

Grow at TIAS

At TIAS we believe in Life Long Development, continuous personal, professional and network development during and after your studies. With more knowledge, better skills and a broader network, you will be able to create more impact and be successful.

More about learning at TIAS » 

Brochure TIAS School for Business & Society

Get to know TIAS: The business school for tomorrow's leaders.